Double And Triple Bottom

Double and triple bottoms

The double bottom is the opposite of a double top while the triple bottom is the opposite of a triple top. A double bottom is a scenario where the price of a security reaches a low twice before rising up. The price of the security is unable to make a lower low than the previous one. Also, the price makes a break above the significant peak. This is interpreted as a sign of strength.

A triple bottom is a scenario where the price of a security reaches a low thrice before rising up. Each low is maybe at or higher than the previous low. The price of the security is unable to make a lower low. It also eventually breaks above the most recent significant peak and moves upwards from then.

What should option traders do when they encounter a double or triple bottom?

When a double or triple bottom occurs and the downtrend is broken with the price rising above the most recent significant peak, a trader can enter into a bullish position at the point when the price breaks above the most recent significant peak or at the point when the trendline is broken.